by Dan Burrows | November 19, 2013 11:28 am
Usually when we debate whether a stock is expensive or cheap, we’re referring to its valuation, or how much you’re paying per share for future earnings.
Of course, sometimes the actual nominal price of a stock can come into play.
Most companies keep shares at more manageable levels for retail investors by splitting the stock when the face price gets too rich. But other companies just don’t bother, the most famous example being the A class shares of Berkshire Hathaway (BRK.A), which go for $174,300 because Warren Buffett has never split the stock. The B class shares (BRK.B) — which are essentially the same for investing purposes — cost just $116.
High prices by face value help keep out day traders and bots alike. Punters can’t really swing a line on a $2,000 stock that does only a few hundred shares in volume every day.
But you do need to be a high roller to take any kind of sizable position in these stocks, since you can’t buy a single share for less than a grand.
Excluding Berkshire Hathaway, here are the only three U.S. stocks that go for at least $1,000 a pop:
11/19 Price: $1,033
Market Cap: $345 billion
YTD Performance: +46%
In a little more than 10 years since its IPO, Google (GOOG) has gone from $85 to more than $1,000 today, good for a gain of nearly 900% — but it been a bumpy ride.
GOOG shares broke above $700 before the last market crash, which wiped out more than 50% of their value. Indeed, in November 2008 you could have picked up Google for about $260 — if you’d had the guts.
Today, GOOG is at all-time highs, rising 46% so far in 2013. Again, that’s on light volume, with an average of fewer than 10,000 shares changing hands a day.
Google sports a forward P/E of less than 20, and a long-term growth rate of 16% — or about half the projected growth rate it carried before the last market crash.
11/19 Price: $1,122
Market Cap: $57.7 billion
YTD Performance: +81%
It’s hard to believe Priceline.com (PCLN) is one of the most expensive stocks by face value. After all, the online travel company was a classic example of the dot .com boom-and-bust.
Shares went for more than $900 at one point in 1999. A year later they were below $10. But PCLN didn’t die, and after squeaking through the rest of the decade, went on a tear in 2010 and didn’t look back.
The stock is up 84% for the year-to-date — on relatively tiny volume, of course. An average of fewer than 8,000 PCLN shares change hands every day.
Priceline has a forward P/E of 22, but then, earnings are forecast to grow at an average pace of almost 20% a year for the next five years or so.
11/19 Price: $2,675
Market Cap: $3.2 billion
YTD Performance: +5.7%
Even though you probably don’t know Seaboard (SEB), you almost certainly know its most famous product: Butterball turkey. But Butterball is just a small part of Seaboard, whose businesses include an eclectic mix of pork production, container shipping on the high seas, and electric power plants in the Dominican Republic.
SEB shares are up just 8.2% so far this year to lag the S&P 500, and they’re also more volatile than the broader market. Furthermore, with a price of nearly $3,000 a pop, average daily volume comes to just 391.
Only one analyst follows SEB, according to Thomson Reuters, and he didn’t submit estimates, so Seaboard has no forward price-to-earnings ratio (P/E). On a trailing basis, the stock fetches a multiple of 16, and its price-to-sales ratio is 0.5.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
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